New funds, disappearing fortunes, and an investor begs Meta to cool it with the metaverse already

Reports that the United States was discussing launching a national security review of some of Elon Musk's ventures were "not true," said the White House today. As noted last week by Business Insider, if Musk's Twitter acquisition was to be reviewed by CFIUS for national security reasons, the agency could recommend to President Biden that he nix the deal, which would presumably please Musk. In fact, after Bloomberg first reported that U.S. officials are growing uncomfortable with some of Musk's business dealings, a Twitter user wrote that "it would be hysterical if the government stopped Elon from over paying for Twitter." Musk replied to the tweet with the "100" emoji and a rolling-on-the-floor-laughing emoji.

At least one prominent investor is now encouraging Meta to cut back on its massive investment in Reality Labs, its metaverse project, saying the company has "lost the confidence of investors." Brad Gerstner, whose fund Altimeter Capital owns hundreds of millions of dollars worth of Meta shares, published an open letter to Mark Zuckerberg and Meta's board of directors today, titled "Time to Get Fit." In the letter, he accuses Meta of drifting "into the land of excess" with "too many people, too many ideas, too little urgency." In addition, Gerstner wrote that the company's focus on the metaverse had distracted it from focusing on its core business. Business Insider has more here.

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Last week at TechCrunch's annual Disrupt event, this editor sat down with VCs from two firms that have come to look similar in ways over the last five or so years. One of those VCs was Niko Bonatsos, a managing partner at General Catalyst (GC), a 22-year-old firm that began as an early-stage venture outfit in Boston and that now manages many tens of billions of dollars across as a registered investment advisor. Bonatsos was joined onstage by Caryn Marooney, a partner at Coatue, which began life as a hedge fund in 1999 and now also invests in growth- and early-stage startups. (Coatue is managing even more billions than General Catalyst – upwards of $90 billion, per one report.)

Because of this blurring of what it means to be a venture firm, much of the talk centered on the outcome of this evolution. The overarching question was: does it make sense that firms like Coatue and GC (and Insight Partners and Andreessen Horowitz and Sequoia Capital) now tackle nearly every stage of tech investing, or would their own investors be better off if they'd remained more specialized?

While Bonatsos called his firm and its rivals "products of the times," it's easy to wonder whether their products are going to remain quite as attractive in the coming years. Most problematic right now: the exit market is all but frozen. With a global recession looming, it's also going to be particularly challenging to deliver outsize returns after raising the amounts that have flowed to venture firms over the last handful of years. General Catalyst, for example, closed on $4.6 billion back in February. Coatue meanwhile closed on $6.6 billion for its fifth growth-investment strategy as of April, and it's reportedly in the market for a $500 million early-stage fund at the moment. That's a lot of money to double or triple, not to mention grow tenfold. (Traditionally, venture firms have aimed to 10x investors' dollars.)

I was thinking today about last week's conversation and have some additional thoughts in italics about what we discussed on stage. What follows are excerpts from the interview, edited for length. 

For years, we've seen a blurring of what a “venture” firm really means. What is the outcome when everyone is doing everything?

NB: Not everyone has earned the right to do everything.

More here.

The Coterie, an 18-month-old, New York-based startup that builds financial products for founders (it advertises access to lending and estate planning tools, as well as to "elite" venture funds that include Coatue Management, Andreessen Horowitz, Tribe Capital and Initialized Capital), has launched with $50 million of funding led by Andreessen Horowitz. Other investors include Initialized Capital, Pear VC, Gradient Ventures, Doordash cofounder Stanley Tang and AngelList founder Naval Ravikant. Bloomberg has more here.

Fermyon Technologies, a 13-month-old, Longmont, Co.-based cloud computing startup founded by former Microsoft engineers, has raised $20 million in Series A funding led by Insight Partners and Amplify Partners. The company has already raised $26 million. TechCrunch has more here.

Merge, a two-year-old, San Francisco and New York-based startup that offers an API integration service with a focus on HR, payroll and accounting systems, has raised $55 million in Series B funding led by Accel, with participation from earlier investors NEA and Addition. This brings the company's total funding to $75 million. TechCrunch has more here. 

Heura, a five-year-old, Barcelona-based plant-based meat startup, has raised a €20 million bridge round that it's hoping will get it to a big Series B in 2023. Unovis Capital helped with the round, along with numerous individual investors, including NBA star Ricky Rubio. TechCrunch has more here.

Odyssey Interactive, a 2.5-year-old, Waterloo startup that operates an indie game studio, raised a $19 million Series A led by Makers Fund, with Anthos Capital, The Mini Fund, Andreessen Horowitz, and longtime Benchmark partner Mitch Lasky pitching in. VentureBeat has more here.

Proemion, a startup based in Fulda, Germany, whose technology allows customers who operate in industries including construction, agriculture, logistics, and natural resources to manage equipment, plan maintenance, save fuel costs, and monitor CO2 emissions, raised a $33.5 million round from Battery Ventures. More here.

WeTravel, a six-year-old, San Francisco- and Amsterdam-based all-in-one business management and payments platform built for multi-day travel businesses, just raised $27 million in Series B funding led by Left Lane Capital, with participation from earlier investors Swift Ventures and Base10, along with several angel investors. The outfit has now raised $34 million altogether. TechCrunch has more here.

Apex Space, a three-month-old startup that aims to transform satellite bus manufacturing (the "bus" is the part of the spacecraft that hosts the payload), has emerged from stealth mode with $7.5 million in seed funding led by Andreessen Horowitz. Founder and CTO Maximilian Benassi spent six years at SpaceX previously, including as a senior propulsion engineer. TechCrunch has more here.

Ciro, a San Francisco startup that to give sales teams access to the same capabilities as larger tech companies, starting with dental practices, raised $3.8 million in seed funding led by CRV, with participation from Y Combinator and b, according to Fortune, which has more here.

Gearflow, a four-year-old, Chicago-based all-in-one parts marketplace for heavy equipment owners, has raised $5.5 million round led by Brick & Mortar Ventures. More here.

Sunsave, a London startup founded this year that is offering consumers a subscription plan to switch to solar power, raised a $5.65 million round in January 2022 from investors including Neurone Group and Plug and Play Ventures. More here.

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Bain Capital has raised more than $2 billion for its latest Tech Opportunities Fund and plans to use part of the investment to expand its dealmaking in Europe. That’s up from the $1.3 billion Bain raised for its first, U.S-focused fund, which launched in 2019 and that invests in late-stage privately held tech companies, as well as conducts buyouts of companies with annual recurring revenue within a specific target zone. Bloomberg has more here.

A little afield, but: SoftBank-backed Jellysmack, which helps content creators become YouTube and TikTok stars, is launching a spending spree for growth in Asia, following staff cuts earlier this year. The New York-based startup said it’s partnering with Kuala Lumpur-based WebTVAsia to invest $30 million in up-and-coming influencers, most of whom are on the media giant’s roster. That money is part of a $500 million package Jellysmack has earmarked to fund social media personalities as it bets on their long-term growth. Bloomberg has more here.

Amazon is poised to take a stake in the parent of Hawaiian Airlines as part of a deal to expand the e-commerce giant’s cargo-hauling operations using a fleet of Airbus SE freighters. Hawaiian Holdings Inc. issued warrants allowing Amazon to acquire as much as 15% of the carrier’s outstanding shares, according to a statement Friday. The warrants are exercisable over the next nine years. Bloomberg has more here.

Nathan Anderson, who founded the research firm that took down EV maker Nikola, says there's "still plenty of fraud out there." More here.

The co-founder of Red Bull, Dietrich Mateschitz, has died at age 78. Mateschitz, an Austrian billionaire, also owned a Formula 1 (F1) racing team, branded as the Red Bull team, since 2005. CBS News has more here.

The fortunes of Snap co-founders Evan Spiegel and Bobby Murphy are "disappearing just as fast as they were made," observes Bloomberg. After shares of Snap plunged Friday on the company's slowest quarterly sales growth report to date, CEO Spiegel, 32, had a net worth of $2.3 billion; last year at this time, his net worth was reportedly $13.9 billion. More here.

Rishi Sunak was elected today by his fellow conservative lawmakers to become Britain’s third prime minister this year, fueling ongoing curiosity about his wealth. The British tabloids have already anointed the Stanford MBA “Rishi Rich.” Meanwhile, his wife, a fashion designer, is the daughter of the billionaire founder of the technology company Infosys. The New York Times has more here.

Telehealth startup Cerebral told staffers it is cutting jobs and restructuring its operations in moves that will affect about 20% of its employees. The SoftBank-backed business, which publicly launched its services in 2020, added hundreds of thousands of patients with social-media ads and quick prescriptions for attention-deficit hyperactivity disorder and other mental-health conditions, the WSJ has reported. It went on to raise hundreds of millions of dollars in venture capital and to hire hundreds of nurse practitioners as contract workers to see clients. But things perhaps moved too quickly. Some of Cerebral’s practices have become the subject of investigations by the Federal Trade Commission and Justice Department. The WSJ has more here. 

Tesla has slashed the price of its entry range vehicles in China by as much as 9% to reignite sluggish domestic demand in the final quarter. As notes Fortune: "The move comes as [CEO Elon] Musk looks to deliver on his promise for an “epic end of year” in which the company hopes to grow volumes by roughly 50% and drive the stock price higher to achieve a $4.5 trillion market cap, higher than the combined value of the two most valuable companies today (Apple and Saudi Aramco). This week is crucial for Tesla, as the entrepreneur is expected to sell billions of dollars’ worth of stock this week to finance his $44 billion Twitter deal before an Oct. 28 court deadline." More here.

What the Alzheimer’s drug breakthrough means for other diseases.

Apple flexed it muscle again today, with new language explaining its policy toward cryptocurrency trading and non-fungible tokens. The Cupertino, Ca., company said it has no issue with crypto exchanges or any other apps that allow the trading of digital tokens and currencies, provided those exchanges have the requisite regional licenses to operate where the app is distributed. But in order for apps to sell NFTs and related services, they’ll have to give Apple a cut and go through Apple’s in-app purchase systems. Bloomberg has the story here.

Orders for cocaine, deaths by fentanyl.

A unified field theory of Bob Dylan.

Truly terrifying things to see in a haunted house.

Brad Pitt has a new skincare line that says it uses leftover grapes from a famous French winery.

Il Borro.

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